Greggs USA, Inc. v. 400 East Professional Associates, LP
198 N.E.3d 1062
Ill. App. Ct.2021Background
- Greggs leased 1,375 sq. ft. ground-floor commercial Unit A on June 21, 2016 to use "as a bakery and restaurant." The lease made rent "independent of every other covenant" and set phased rent abatements; tenant took possession on lease execution.
- The lease included an integration clause and an attached Work Letter stating premises delivered "as is, where is," with paragraph 30 providing: "The existing black iron shall be delivered to Tenant in good working order and in a clean condition" and making tenant responsible for maintaining it.
- Greggs began renovations but the condominium association ordered work stopped in Sept. 2016 after finding unlicensed contractors; Greggs abandoned possession in 2017 and withheld rent, then sued alleging 400 East breached paragraph 30 by denying access/alteration to the building ductwork ("black iron") needed for make‑up air.
- 400 East counterclaimed for unpaid rent, late fees, and costs, alleging Greggs defaulted and left unfinished/poor renovations; it later mitigated by reletting in 2019.
- On summary judgment the trial court held Greggs breached by withholding rent and that 400 East did not breach paragraph 30; it awarded 400 East unpaid rent, fees, and attorney fees. Greggs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 400 East breached the lease by failing to provide usable ventilation ("black iron") for a bakery/restaurant | Greggs: paragraph 30 + paragraph 3 (use as bakery/restaurant) and pre‑lease assurances meant landlord committed to deliver usable supply-and-exhaust ventilation or permit modification | 400 East: paragraph 30 requires delivery of only the existing black iron as of signing; work letter "as is" and paragraph 4 bar promises to alter building systems | Held: No breach—paragraph 30 required delivery of existing system in working/clean condition, not modification or obligation to provide make‑up air |
| Whether Greggs could withhold rent because of alleged breach | Greggs: landlord’s refusal to allow connection prevented opening, so rent withholding justified | 400 East: lease unambiguously makes rent independent of other covenants; withholding breached lease | Held: Greggs’s withholding breached the independent rent covenant; failure to pay defeated Greggs’s claim (no plaintiff performance) |
| Whether extrinsic evidence (pre‑contract statements/affidavits) can create a factual dispute about landlord promises | Greggs: affidavits from owner and engineer describe pre‑lease assurances that duct access would be available, creating ambiguity | 400 East: integration clause/four‑corners rule bars prior negotiations; contract unambiguous | Held: Integration clause and four‑corners rule preclude extrinsic evidence; affidavits did not create a material factual dispute |
| Whether summary judgment for unpaid rent and fees was proper on landlord counterclaim | Greggs: challenged the merits of landlord breach and factual disputes | 400 East: Greggs admitted nonpayment; reletting and damages established | Held: Summary judgment appropriate for 400 East on counterclaim for unpaid rent, late fees, and attorney fees |
Key Cases Cited
- Seymour v. Collins, 39 N.E.3d 961 (Ill. 2015) (summary judgment standard; construe record against movant)
- Asset Recovery Contracting, LLC v. Walsh Constr. Co. of Ill., 980 N.E.2d 708 (Ill. App. 2012) (four‑corners rule; extrinsic evidence cannot vary an unambiguous written contract)
- Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882 (Ill. 1999) (integration clause bars creating extrinsic ambiguities from prior negotiations)
- Zirp‑Burnham, LLC v. E. Terrell Assocs., Inc., 826 N.E.2d 430 (Ill. App. 2005) (elements of breach of contract claim)
- Zion Indus., Inc. v. Loy, 361 N.E.2d 605 (Ill. App. 1977) (tenant’s duty to pay rent is independent of landlord’s repair covenant)
- Intaglio Serv. Corp. v. J.L. Williams & Co., 420 N.E.2d 634 (Ill. App. 1981) (landlord obligations must be sufficiently specific to create duties)
- Lipschultz v. So‑Jess Mgmt. Corp., 232 N.E.2d 485 (Ill. App. 1967) (contrast where lease contained specific landlord obligations to install ductwork/heating unit)